Contingencies in Federal Contract Bidding

The government “does not knowingly permit contingency factors to be included in the prices in its fixed price contracts.” Ssangyong Trading Company, Ltd, ASBCA No. 21614, 79 – 1 BCA 13,810 ¶ 67,736. This is especially true where the contingency is to cover an event which is cognizable under the “Changes” or “Differing Site Conditions” clause. Any suggestion by the government that a contractor should place contingencies in its bid is contrary to the well – known purpose of these clauses, namely the elimination of “gambling” on contract performance requirements. See W.D. McCullough Construction Company, ENGBCA No. 4593, 87 – 1 BCA ¶ 19,515. Indeed, the “Differing Site Conditions” clause permits bidders to rely upon the representations in the contract of subsurface or latent physical conditions without considering “how large a contingency should be added to the bid to cover the risk.” Renda Marine, Inc. v. United States, 66 Fed. Cl. 639, 650 (2005) (quoting Foster Construction et.al. v. United States, 193 Ct.Cl. 587, 435 F.2d 873, 887 (1970) ).

Updated: July 30, 2018